The Stock Market Xmas Bonus
With December fast approaching, I wanted to take the opportunity to make my followers aware of a little known market phenomenon and it is something that usually means 1 thing for the Financial Markets..... Profit..... and LOTS of it.
The phenomenon is widely known as the Stock Market Xmas Bonus, and it is a seasonal Trend that is particularly strong during a Bull run (which we are currently in the midst of). The reason it is such a phenomenon is that in the last 67 Years - December is statistically the best performing month for the markets and it generates more return than any other time of the year.
This "should" mean that we will see Stocks fly off to the stratosphere and continue on the already established trend - but as a note of caution there will likely be pull backs along the way as the Trump administration / Interest Rate hikes / and other Global short term news hits the market in the short term (I have covered this in a previous blog) - but unless the market enters into a full on correction / reversal... hold through the fire and watch your profit grow - December is well known for it.
Since 1950, December has had an Incredible 50 Up Months and only 17 Down months - which is pretty incredible when you compare with the Summer months over the same time period (average June - August of 37 Up months and 30 Down months) and therefore it is easy to understand why it is considered a strong seasonal trend - and certainly a seasonal trend with which we can use to our advantage as Trend Traders because we can safely assume that by holding our long term positions - we "should" see a good return but please understand - nothing is guaranteed in this life.
There are many trains of thought as to why this phenomenon occurs -
- is it happy optimistic retail traders looking forward to the holiday period and therefore more taking Buy positions?
- is it Market Manipulation by the Big Money (Hedge Funds / Investment Banks etc) who understand the December phenomenon?
- is it Retail Investors throwing in the Xmas Bonus money into the Stock Market?
On a personal level - I like to think it's a combination of all 3, and by recognizing the pattern (established since 1950) - we should exploit this to your advantage. Buy and Hold long. It is not rocket science.
The path has been laid out before us over the last 67 years and playing the stock market in December is considered the safest month to do so.... so go ahead... Invest.... and hopefully we shall see another profitable December.
If you’re interested in education and you struggle with your trading results… we’d love to hear from you.